Working past age 65
Under no circumstances can a member start their pension without going through the retirement process. An active member can only collect a pension if they are rehired after age 65.
Once a member joins the Plan, they are considered an “active member” as long as they are working at the college or related employer. In order to start a pension, the member must retire. For the purposes of the Plan, retiring means that the member and employer have terminated the employment relationship and the member is eligible for an immediate pension from the CAAT Pension Plan.
Contributions over age 65
Updated March 7, 2012
Most Plan members contribute to the Canada Pension Plan (CPP) on a portion of their earnings, and will earn a CPP pension when they retire. The CAAT Plan takes this fact into consideration by integrating our contribution and pension formulas with the CPP.
CAAT Plan contributions are lower on the portion of earnings on which CPP contributions are made and higher on the portion of earnings on which CPP contributions are not made:
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- Contributions in 2012 on earnings on which CPP contributions are made*: 11.1%
- Contributions in 2012 on earnings on which CPP contributions are not made: 12.9%
* on the first $3,500 of earnings, contributions are made to the CAAT Plan but not to CPP
Members who are age 65 or older and who do not contribute to the CPP contribute to the CAAT Plan at the high rate (12.9% in 2011) on all earnings. They then receive an enhanced pension for that service as outlined below.
CAAT Plan pensions are lower on the portion of earnings on which CPP benefits are paid and higher on the portion of earnings on which CPP benefits are not paid:
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- Pension based on earnings on which CPP benefits are paid: 1.3%
- Pension based on earnings on which CPP benefits are not paid: 2.0%
Recent changes to CPP allow an employee to start to collect their CPP pension while continuing to work. Once they reach age 65, they also have the option to cease contributing to the CPP or to continue to contribute and build CPP’s separate Post-Retirement Benefit.
Members who are age 65 or older and who do not contribute to the CPP will receive a CAAT Plan pension for that service based on 2.0% of their highest average pensionable earnings.
Procedure when a member turns 65 and opts to stop CPP contributions
Updated March 7, 2012
Once a member turns 65, they have the option to start to collect CPP and stop contributing to the CPP even if they continue working. If this happens, their CAAT Plan contributions must be adjusted so that, starting the calendar year after they stop contributing to the CPP, they contribute to the CAAT Plan at the high rate on all earnings. At retirement, their CAAT Plan pension in respect of that service will be calculated at the full 2.0% level.
The following steps should be taken when a member stops contributing to the CPP.
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- Member completes Section C on the Change of Information or Beneficiary form indicating they have stopped contributing to the CPP
- Member completes the CRA form CPT30E (11) available from the CRA website.
- CAAT Plan contributions continue at the low and high rates to the end of the calendar year;
- CAAT Plan contributions begin at the high rate at the beginning of the next calendar year.
- At retirement, the member’s pension is calculated at the full 2.0% level on those years of high contributions.
CPP Contributions Chart
Added July 6, 2011
Use this chart to help determine the treatment of contributions for members in the CAAT Plan.
|
Age in current year |
Contribute to CPP? |
Contribute to CAAT Plan? |
CAAT Plan contributions in following year |
Pension formula at retirement |
|
65 & under |
Yes |
Yes |
Low / high rates |
1.3% / 2.0% |
|
65 & under* |
No |
Yes |
Low / high rates |
1.3% / 2.0% |
|
65 – 71 |
Yes |
Yes |
Low / high rates |
1.3% / 2.0% |
|
65 – 71 |
No |
Yes |
High rate |
2.0% on all service with contributions at high rate |
* Members under 65 whose employment is considered "excepted employment" as defined by the CPP, contribute to the CAAT Plan at the high rate only.
Q. How do the new rules apply to members over age 65 who previously stopped contributing to CPP because they started to collect their CPP pension?
A. Members who want to continue to NOT contribute to CPP, must complete the CRA form CPT30. Otherwise, the rules are the same. If they decide to resume CPP contributions they will contribute to the CAAT Plan at the integrated rates. Refer these members to the Making Choices - Working Past 65 booklet for information to make their decision.
Q. If a member elects to resume CPP contributions, how should the Plan be notified?
A. The member should complete and submit the Change of Information or Beneficiary form.
Q: What are the options when hiring an employee over age 65?
New hires (or rehires) that are over age 65 (whether full time or part time) have a choice:
- They can choose to join the Plan, contribute, and earn a pension, or
- They can choose not to join the Plan.
CPP and the CAAT Plan
If they choose to join the CAAT Plan and are already collecting their CPP pension, whether or not they contribute to CPP will affect their CAAT Pension Plan contributions.
- If they contribute to CPP they will contribute to the CAAT Plan at the integrated rates – at the low rate on earnings up to the YMPE and at the high rate on earnings over the YMPE
- If they don’t contribute to CPP they will contribute to the CAAT Plan at only the high contribution rate
Q: What happens to the pension of a retired member over age 65 who is rehired?
Rehired members who choose to rejoin the Plan must stop receiving their CAAT Plan pension payments. When they retire again, their 2 pensions (one earned before retirement and one earned after) will be recalculated and blended into a single payment.
Rehired members who are over 65 and choose not to join the Plan will continue to receive their pension and their employment income, and will make no further contributions to the Plan.
Q: Can you provide an example of a member over 65 who stops contributing to the CPP?
Norm just turned 65. He plans on working until he’s 67, so he and his wife can retire together. Norm’s retirement income strategy takes advantage of the fact that he can start collecting his pension from the CPP without having to stop working and retire.
Norm started collecting his CPP pension and opted to not contribute to CPP to build CPP's Post-Retirement Benefit. His employer stopped deducting CPP contributions right away, but his contributions to the CAAT Plan will continue at the low and high rates until the end of 2012.
Starting January 1, 2013, until he ultimately retires, Norm will contribute to the CAAT Plan at the high rate. When Norm retires, his pension calculation will take into account the years of contributions at the high rate.